May 11, 2021

Volume XI, Number 131

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May 11, 2021

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May 10, 2021

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Cherokee Nation Wins Summary Judgment in COVID-19 Business Interruption Claim

In a resounding victory for policyholders, an Oklahoma state court granted partial summary judgment for the Cherokee Nation in its COVID-19 business interruption claim. The Cherokee Nation is seeking coverage for losses caused by the pandemic—specifically, the inability to use numerous tribal businesses and services for their intended purpose.

Based on the “all risks” nature of the policy and the fortuitous nature of its loss, the Cherokee Nation sought a partial summary judgment ruling that the policies afford business interruption coverage for COVID-19-related losses. The policy provided coverage for “all risk of direct physical loss or damage,” which the Cherokee Nation contended was triggered when the property was “rendered unusable for its intended purpose.” In support of this view, and consistent with established insurance policy interpretation principles, such as providing meaning to every term and reading the policy as a whole, the Cherokee Nation argued that a distinction must exist between “physical loss” and “physical damage.” This distinction demands an interpretation supporting the “intended purpose” reading of the policy language. Thus, the physical presence of COVID-19 depriving the Cherokee Nation of the use of covered property for its intended purpose triggered a covered loss.

The Cherokee Nation also highlighted that many insurers, including those at issue in the lawsuit, added exclusions to their policies specifically barring coverage for communicable disease, but did so only after other policyholders filed similar claims for COVID-19 losses. Such exclusions would be superfluous if communicable disease coverage were not covered under the original policy language.

The court agreed, holding that the Cherokee Nation had made a “plausible claim” under its all-risk policy for business interruption coverage, while the insurers failed to show any exclusions would bar coverage. In support of its decision, the court cited to the recent policyholder win in the Elegant Massage LLC v. State Farm case (discussed in a prior post on this blog) affirming that court’s broad reading of the phrase “direct physical loss” to assert a plausible claim for business interruption coverage.

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Copyright © 2021, Hunton Andrews Kurth LLP. All Rights Reserved.National Law Review, Volume XI, Number 21
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Sergio F. Oehninger Insurance Coverage Attorney Hunton Andrews Kurth Washington, DC
Partner

Sergio represents companies in complex insurance coverage and bad faith disputes nationally and internationally.

Sergio counsels multinational corporations on insurance coverage and risk management issues arising in various industries – including financial services, retail, energy, technology, real estate, construction, and hospitality.

His insurance coverage advice focuses on risks such as: cyber and data breach; commercial general liability; directors and officers; professional liability; employment practices; property and casualty; business interruption;...

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Geoffrey B. Fehling Associate Washington, DC Insurance Coverage Litigation
Counsel

Geoff dedicates his practice to advising corporate policyholders and their directors and officers in complex insurance coverage matters, from placement of sophisticated insurance programs and policy reviews to claim advocacy through arbitration, litigation, trials, and appeals. As part of Hunton Andrews Kurth’s full-service insurance coverage practice, he works with clients to maximize insurance recoveries through policy analysis and audits, claims presentation and negotiation, alternative dispute resolution, and litigation.

Geoff regularly...

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